The Aave price is close to breaking out this morning as investors return to altcoins. But for the real fireworks, the token must clear resistance.
Decentralised finance (DeFi) market leader Aave (AAVE) has been building up for a break higher over the last six days. But so far, the price has run into trouble above $412.00. Although considering the strength in the crypto market, it may only be a matter of time before it succeeds.
Like most cryptocurrencies, the AAVE price has seen significant gains in the last three weeks. Since the 19th of July, the price has almost doubled as confidence returns the digital assets.
Furthermore, it’s not just confidence that is returning. The decentralized finance protocol has steadily grown its Total Value Locked (TVL) assets to a record $15 billion in August, almost $5b more than the closest rival compound. As a result, Aave’s market cap is back above $5 billion, ranking it as the 27th-largest digital asset behind Tron. This is encouraging and indicates that DeFi adoption is increasing, which should signal the Aave price will do the same.
Although for that to happen, the bulls must make a final push.
What comes next?
The daily chart highlights a clear trend line at $412, from the top of the bounce following the May crash. This is a significant level of resistance, which was evident on the 5th of August when it rejected the rally, sending Aave 16% lower.
Because of the velocity of the decline in May, there is a void of technical resistance between $412.00 and the all-time high of $707.67. Therefore, if the price hurdles this resistance, it clears the path to a much higher valuation.
Although, the rally has not seen an increase in trading volume. This is of some concern and may indicate a lack of conviction from buyers.
Not to mention, the price is starting to look a little stretched in the near term. The Relative Strength Index reading of 70.28 signals a squeeze higher may not be sustainable.
However, current momentum should lead to a breakout. If that happens, the $412.00 resistance becomes the first level of support.
The price outlook will be positive as long as Aave stays above the 100-day moving average at $335.30. Should Aave lose this support level, the bullish view becomes invalid and suggest the price may decline further.
AAVE price chart (daily)
For more market insights, follow Elliott on Twitter.